Method and system for account activation

ABSTRACT

The present invention comprises a method of activating a prepaid account using an existing electronic funds transfer network which includes a point-of-sale (POS) terminal, debit/credit card processing infrastructure and an account insurer authorization center. The method comprises the steps of: obtaining identification data concerning the account to be activated at the POS terminal; sending an activation request message including, the obtained data, from the POS terminal through the card processing infrastructure to the account issuer authorization processing center; receiving the activation request message at the account insurer authorization processing center, deciding whether or not to activate the account and generating a denial/response code based upon the activation decision, the denial/response code not resulting in the transfer of any funds; sending the denial/response code from the account insurer authorization processing center, through the card processing infrastructure to the POS terminal; and receiving the denial/response code at the POS terminal, decoding the denial/response code and confirming at the POS terminal, the activation status of the account. In a preferred embodiment, the account being activated is a card, such as a prepaid card.

CROSS-REFERENCE TO RELATED APPLICATIONS

[0001] This application claims the benefit of U.S. Provisional PatentApplication No. 60/182,171, filed Feb. 14, 2000 and entitled, “MethodAnd System For Account Activation”.

BACKGROUND OF THE INVENTION

[0002] The present invention relates generally to the activation ofaccounts and, more particularly, to the activation of consumer or otheraccounts which are associated with a product or service of value,including prepaid phone cards, gift cards, ATM cards, and the likeutilizing an existing point-of-sale (POS) debit or credit cardauthorization processing system without any actual transfer of funds.

[0003] U.S. Pat. No. 6,000,608 entitled “Multifunctional Card System”describes and claims a system for the activation of cards, such asprepaid phone cards, gift cards, and the like utilizing an existingdebit card/credit card processing system. As described in detailbeginning at column 5, line 49, the system and methods employed in the'608 patent suffer from a significant drawback, namely because of theway the system functions, the activation of a card or other accountusing existing debit or credit card networks requires the actualtransfer of funds, even de minimis funds, for activation of an accountor card. The '608 patent describes a system and methods in which nominalfunds (i.e., one cent or more) may be employed for this purpose.However, because of the requirement for an actual transfer of funds, thesystem and method described in the '608 patent suffers from certaininefficiencies. The present invention is an improvement upon the systemand methods of the '608 patent in that it establishes a system andmethod for the activation of consumer or other accounts, includingprepaid cards for goods or services using an existing credit/debit cardprocessing system which does not require the transfer of any funds.

BRIEF SUMMARY OF THE INVENTION

[0004] Briefly stated, the present invention comprises a method ofactivating a prepaid account using an existing electronic funds transfernetwork which includes a point-of-sale (POS) terminal, debit/credit cardprocessing infrastructure and an account insurer authorization center.The method comprises the steps of: obtaining identification dataconcerning the account to be activated at the POS terminal; sending anactivation request message including, the obtained data, from the POSterminal through the card processing infrastructure to the accountissuer authorization processing center; receiving the activation requestmessage at the account insurer authorization processing center, decidingwhether or not to activate the account and generating a denial/responsecode based upon the activation decision, the denial/response code notresulting in the transfer of any funds; sending the denial/response codefrom the account insurer authorization processing center, through thecard processing infrastructure to the POS terminal; and receiving thedenial/response code at the POS terminal, decoding the denial/responsecode and confirming at the POS terminal, the activation status of theaccount.

[0005] In a preferred embodiment, the present invention comprises amethod of activating a prepaid card using an existing electronic fundstransfer network, including a point-of-sale (POS) terminal, debit/creditcard processing infrastructure and an account insurer authorizationprocessing center. The method comprises steps of obtainingidentification data from the card to be activated at the POS terminal;sending an activation request message, including data obtained from thecard, from the POS terminal through the card processing infrastructureto the account insurer authorization processing center; receiving theactivation request message at the account insurer authorizationprocessing center, deciding whether or not to activate the card andgenerating a denial/response code based upon the activation decision,the denial/response code not resulting in the transfer of any funds;sending the denial/response code from the account insurer authorizationprocessing center through the card processing infrastructure to the POSterminal; and receiving the denial/response code at the POS terminal,decoding the denial/response code and confirming at the POS terminal,the activation status of the card.

BRIEF DESCRIPTION OF THE SEVERAL VIEWS OF THE DRAWINGS

[0006] The following detailed description of a preferred embodiment ofthe present invention will be better understood when read in conjunctionwith the appended drawings. For the purpose of illustrating theinvention, there is shown in the drawings an embodiment which ispresently preferred. It should be understood, however, that theinvention is not limited to the precise arrangements and instrumentalityshown. In the drawings:

[0007]FIG. 1 is a functional schematic block diagram of the primarystructural features of a system for account activation in accordancewith a preferred embodiment of the present invention; and

[0008]FIG. 2 is flow diagram of the major steps employed by the presentinvention in the activation of a prepaid card or an account using thesystem of FIG. 1.

DETAILED DESCRIPTION OF THE INVENTION

[0009] As discussed above, the present invention comprises animprovement over the system and methods disclosed in U.S. Pat. No.6,008,608, the entire subject matter which is hereby incorporated hereinby reference. FIG. 1 shows the principal functional components of asystem 10 in accordance with a preferred embodiment of the presentinvention. The primary function of the system 10 is to provide real timenotification by a merchant to an account issuer (i.e., card issuer)including appropriate information whenever the account issuer's“product” (i.e., an account or card) has been sold so that the valueassociated with the product can be activated to permit immediate, fullusage of the product by the purchaser or other user. The activationprocess creates guaranteed value in a database account of the issuerwhich is immediately available for use by the purchaser once the accountis credited with the amount of the purchase upon notification by themerchant.

[0010] The system 10, which uses standard electronic funds transfer(EFT) processing techniques and infrastructure, includes a point-of-sale(POS) terminal 12 which is located at a merchant facility or otherconvenient location. The POS terminal 12 is typical of POS terminalswell known to those of ordinary skill in the art and includes anprocessor 14 for processing the information about the purchase of goodsand services, a keyboard 16, keypad or other data entry device such as atouch screen, to facilitate entry of information regarding the purchaseof goods or services, a display 18 such as a CRT, LCD or other displayfor displaying information to the terminal user and/or customer, a cardreader 20 which may be a MIRC or other reader well known to those ofordinary skill in the art which functions to read the magnetic stripe orother identifier of credit, debit or other cards such as a prepaidtelephone card, gift card, prepaid ATM card etc., and a communicationinterface 22 which functions to facilitate the communication ofinformation from the POS terminal 12 to a remote location and to receiveinformation from a remote location at the POS terminal 12.

[0011] It will be appreciated by those of ordinary skill in the art thatthe precise structure of the POS terminal 12 and the components of thePOS terminal 12 may vary from the example POS terminal 12 provided inFIG. 1. The present invention is adapted to be employed in connectionwith any existing or future POS terminal and so such variations may befound. For example, some POS terminals may include a printer and somePOS terminals may include more than one card reader. Similarly, some POSterminals may employ a communication interface which is positioned at aremote location, such as in the back room of a retail facility.Likewise, some POS terminals may not include a keyboard or other of theabove described components. It will be appreciated by those skilled inthe art that the precise structure of the POS terminal 12 should not beconsidered to be a limitation on the present invention which is equallyapplicable with respect to any and all POS terminals.

[0012] The second principal component of the system 10 in accordancewith the present invention is an existing, typical debit card/creditcard processing infrastructure 30 of a type well known in the art. Forexample, the card processing infrastructure 30 could be of the typeemployed in an existing electronic funds transfer (EFT) network. In thepresent embodiment, the card processing infrastructure 30 includes aservices network 32, a services switch 34, and one or more card issuerprocessors 36. The services network 32 could be an existing money accessservices (MAS) network and the services switch 34 could be an existingMAS switch. Other types of services networks and/or services switchesknown to those skilled in the art may alternatively be employed. Thecard processing infrastructure 30 functions to receive information fromone or more POS terminals 12 and after a series of authentication stepsand the like conducted by the services network 32 or between the POSterminal 12 and the services network 32, the received information ispassed to the switch 34 where it is “switched” and sent to the correctcard issuer processor 36 for the particular debit card/credit card whichis being employed for the purchase of goods or services by a purchaserat the POS terminal 12. Various components of the card processinginfrastructure 30 may be co-located or may be located at differentplaces depending upon the particular system. For example, the servicesnetwork 32 and the services switch 34 may be co-located and the cardissuer processors 36 may be at various different locations remote fromthe services network 32 and the services switch 34 and remote from eachother. The location of the various components of the card processinginfrastructure 30, as well as the type of equipment employed may varyfrom what is shown and described. The card processing infrastructure 30functions in a manner well known in the art for the prompt, on-lineprocessing of requests from POS terminals 12 for credit card or debitcard authorization for the purchase of goods or services by a cardholder. Further details regarding the structure and operational featuresof the components of the card processing infrastructure 30 are notpresented herein, but are available from publicly available sources.Such details are not necessary for a complete understanding of thepresent invention.

[0013] The third principal component of the system 10 in accordance withthe present invention is a specific account issuer-processing center 40,which may be a “card issuer processor” 36 for a particular card oraccount being activated. The account issuer-processing center 40 istypical of processing centers well known in the art and employed forremote activation of accounts, including cards, such as prepaidtelephone cards, gift cards and the like. The account issuer-processingcenter 40 includes an account issuer authorization processor 42 and anaccount issuer database 44. The account issuer authorization processor42 and the account issuer database 44 may be co-located or may be atseparate locations. The structure of the account issuer authorizationprocessor 42 and the account issuer database 44 are not presentedherein, but are available from publicly available sources. Such detailsare not necessary for a complete understanding of the present invention.The purpose of the account issuer processing center 40 is to receiveinformation from the card processing infrastructure 30 relating to anaccount to be activated and, after verification, based upon criteriaestablished by the account issuer, sending appropriate informationthrough the card-processing infrastructure 30 to the POS terminal 12 toconfirm whether the account has or has not been activated.

[0014] The structure of the system 10 as shown in FIG. 1 and asdescribed above is typical of existing systems of a type typically usedfor activation of prepaid and other cards and accounts and as describedin the '608 patent. Typically, in using such systems, the activation ofa card or account required the actual transfer of funds, even nominalfunds, through the system, as suggested by the '608 patent. The transferof funds, even nominal funds, through such systems resulted insignificant bookkeeping and other unnecessary processing costs whichsignificantly increased the per transaction cost of activation of anaccount or card using the system. The present invention involves usingthe above-described, existing system 10 with a minor modification at thePOS terminal 12 in a manner that permits activation of an account orcard as an informational transaction without the need for any actualfunds, even nominal funds, being transferred and without the associatedbookkeeping or other high transaction costs. Instead, with the presentinvention informational transactions occur which permits confirmation byan issuer that its product has been purchased and that the correspondingvalue in an account can be promptly activated. The present inventionalso permits confirmation to be sent by the issuer to the merchant orpurchaser of the product or card that the value represented by theaccount or card is immediately available for use.

[0015]FIG. 2 is a flow-diagram representation which demonstrates the useof the system 10 for activation of an account or card, in the presentexample, a prepaid telephone or phone card for a prescribed value ordollar amount, i.e. $10.00, which may be imprinted or stored on the cardor may be selected at the time of purchase. It should be understood bythose of ordinary skill in the art that although the steps involved inactivation of a prepaid phone card are described, this is but oneexample of the type of account and/or card which may be activated usingthe system 10 and method of the present invention.

[0016] Referring now to FIG. 2, at the start (200) of the process aninactive prepaid telephone card for a particular value or dollar amountof phone service selected by a customer for purchase at a retail orother facility is read by the card reader 20 at a POS terminal 12 (step202). Inactive telephone cards, which cannot be used to obtain phoneservice until activated are greatly preferred over “live” orpreactivated phone cards because the inactive cards are less likely tobe stolen. The POS terminal operator then formats a standard EFT“purchase” transaction or activation request message with appropriateidentification information from the phone card and with the value ordollar amount of the prepaid phone card to be activated. (Step 204). Thetransaction message is then sent through the communication interface 22as with any other EFT purchase transaction to the services network 32(Step 206) where the message is decoded for routing purposes. Thetransaction message is received by the services network 32 at step 208,which recognizes the card identification data and activates the servicesswitch 34 to send the transaction message to the particular accountissuer authorization processor 42 associated with the particular prepaidphone card for which activation is requested. At step 210, theappropriate account issuer authorization processor 42 receives thetransaction message, compares the card data and value or dollar amountwithin the transaction message to data stored in the account issuerdatabase 44 and decides, based upon internal criteria established by thecard issuer, whether to accept or reject the request for activation ofthe prepaid phone card for the specified value or dollar amountcontained within the transaction message. The account issuerauthorization processor 42 then issues one of two standard “denial”codes or “response” codes depending upon the decision which has beenmade. Neither of the denial codes and neither of the response codes are“approval” codes. For example, if the account issuer authorizationprocessor 42 determines that the prepaid phone card should be activatedfor the specified value or dollar amount, a first standard denial code,such as an “AP” or “89” denial code is generated at step 212.Alternatively, a first non-financial, information only transaction“response” code could be generated. In either case, the transaction doesnot receive an approval code which would create a financial transaction.If the account issuer authorization processor 42 decides to reject therequest for activation of the phone card then a second standard denialcode, such as an “AR” or “90” denial code is generated. Alternatively, asecond non-financial, information transaction “response” code could begenerated. In either case, the transaction does not receive an approvalcode which would create a financial transaction. Other denial/responsecodes could be used if desired, including new codes developedspecifically for this purpose. The important distinction with thepresent invention is that regardless of whether the account issuerauthorization processor 42 decides to accept or reject the request foractivation of the prepaid phone card or other account authorization, theresponse is always a standard network denial code or an informationresponse code, never an approval code which would result in a moneytransaction. However, as will hereinafter be described in greaterdetail, a first denial or first information response code is treated asan acceptance resulting in activation of the prepaid phone card or otheraccount for the specified value or dollar amount, whereas a seconddenial or second information response code is treated as a rejection orfailure to activate the prepaid phone card or other account for whichactivation has been requested.

[0017] In either event, at step 214 the standard denial/response codegenerated by the account issuer authorization processor 42 is sent backthrough the services switch 34 to the services network 32 where it istreated as a “denial” or non-approval of the transaction. Thedenial/response code is thereafter sent to the POS terminal 12 (step216). Upon receiving the denial/response code, the POS terminal 12decodes, translates or interprets the denial/response code and confirmsor displays on the display 18 the activation status which may be either“transaction accepted”, if the first denial/response code is received or“transaction denied”, if the second denial/response code is received.The process ends at step 218.

[0018] The advantage of using only a denial/response code in connectionwith the existing POS debit/credit card system is that no actual moneyor value is transferred, resulting only in an “informational”transaction with no actual transfer of finds, even nominal funds, whichcould result in bookkeeping and other unnecessary processing. With thepresent system, the merchant at the POS terminal is not charged anetwork interchange fee and no financial settlement of any kind occurs.No financial adjustments are required since no finances are processed.However, small standard messaging or processing fees are applied sincesuch fees are applied even in the case of the denial of a transaction.Such fees are substantially less than the fees which are applied in thecase of an actual transfer of value or funds. The only modificationwhich is made to the existing system is a small software change topermit the POS terminal 12 to properly interpret the receiveddenial/response codes and to confirm or display the activation status,i.e., “accepted” or “denied” to the terminal user or customer.

[0019] From the foregoing discussion, it can be seen that the presentinvention comprises an improved method for activation of prepaid cardsor other account activation utilizing an existing debit card/credit cardsystem without the actual transfer of or accounting for any funds orvalue. It will be appreciated by those of ordinary skill in the art thatchanges may be made to the embodiment described above without departingfrom the spirit and scope of the invention as defined by the appendedclaims.

We claim:
 1. A method of activating a prepaid account using an existingelectronic funds transfer network, including a point-of-sale (POS)terminal, debit/credit card processing infrastructure and an accountissuer authorization center, the method comprising the steps of:obtaining identification data concerning the account to be activated atthe POS terminal; sending an activation request message, including theobtained data, from the POS terminal, through the card processinginfrastructure to the account issuer authorization processing center;receiving the activation request message at the account issuerauthorization processing center, deciding whether or not to activate theaccount and generating a denial/response code based upon the activationdecision, the denial/response code not resulting in the transfer of anyfunds; sending the denial/response code from the account issuerauthorization processing center through the card processinginfrastructure to the POS terminal; and receiving the denial/responsecode at the POS terminal, decoding the denial/response code andconfirming at the POS terminal, the activation status of the account. 2.The method as recited in claim 1 , wherein the identification data isobtained from a card associated with the account to be activated byreading the data from a portion of the card where the data is stored. 3.The method as recited in claim 2 , wherein the card is read by swipingthe card through a magnetic stripe reader at the POS terminal.
 4. Themethod as recited in claim 1 , wherein the activation request messageincludes a value for which activation of the account is requested. 5.The method as recited in claim 1 , wherein the activation status of theaccount is displayed at the POS terminal.
 6. The method as recited inclaim 1 , wherein the denial/response code is a standard denial code ofa type used by the card processing infrastructure to deny authorizationof a credit/debit card transaction.
 7. The method as recited in claim 1, wherein the denial/response code is a information code.
 8. A method ofactivating a prepaid card using an existing electronic funds transfernetwork, including a point-of-sale (POS) terminal, debit/credit cardprocessing infrastructure and an account issuer authorization center,the method comprising the steps of: obtaining identification data fromthe card to be activated at the POS terminal; sending an activationrequest message, including data obtained from the card, from the POSterminal, through the card processing infrastructure to the accountissuer authorization processing center; receiving the activation requestmessage at the account issuer authorization processing center, decidingwhether or not to activate the card and generating a denial/responsecode based upon the activation decision, the denial/response code notresulting in the transfer of any funds; sending the denial/response codefrom the account issuer authorization processing center through the cardprocessing infrastructure to the POS terminal; and receiving thedenial/response code at the POS terminal, decoding the denial/responsecode and confirming at the POS terminal, the activation status of thecard.
 9. The method as recited in claim 8 , wherein the card comprises aprepaid telephone card.
 10. The method as recited in claim 8 , whereinthe card comprise a prepaid gift card.
 11. The method as recited inclaim 8 , wherein the identification data is obtained from a card byreading the data from a portion of the card where the data is stored.12. The method as recited in claim 8 , wherein the card is read byswiping the card through a magnetic stripe reader at the POS terminal.13. The method as recited in claim 8 , wherein the activation requestmessage includes a value for which activation of the prepaid card isrequested.
 14. The method as recited in claim 8 , wherein the activationstatus of the card is displayed at the POS terminal.
 15. The method asrecited in claim 8 , wherein the denial/response code is a standarddenial code of a type used by the card processing infrastructure to denyauthorization of a credit/debit card transaction.
 16. The method asrecited in claim 8 , wherein the denial/response code is informationcode.